Australian Patrick Alexander held in Indonesia on embezzlement allegations despite ruling his detention is illegal

An Australian businessman and former senior diplomat is being held in Indonesia after a business deal turned sour, despite a court ruling that his ongoing detention is illegal.

Patrick Alexander, a private equity investor and former second secretary at the Australian Embassy in Jakarta, is under police guard at a Jakarta prosecutor's office.

Mr Alexander – who has been held for three months – has blamed a "corrupt and abusive system" for his plight.

In March, a disgruntled investor accused Mr Alexander of embezzlement and he ended up in jail.

"This is a corrupt and abusive system. It's a corrupt and abusive country and it's time it was exposed to the world," he told 7.30.

After 92 days behind bars, Mr Alexander sued the police for improper detention.

This is a corrupt and abusive system. It's a corrupt and abusive country and it's time it was exposed to the world.

Patrick Alexander

The case was heard in South Jakarta's district court on Monday.

His son Nick Alexander says the court ruled his father should be released.

"The judgment was handed down that he has been detained illegally and that the police should release him," he said.

"I was very happy but I had a feeling things wouldn't go to plan because that's the way things have gone so far."

He was right. Rather than being released, Mr Alexander was taken back into custody.

Nick Alexander says the case should be a civil matter, not a criminal one.

"It was a commercial dispute between him and a former investor," he said.

"The former investor was angry about one of his businesses failing."

His father agrees.

"It's a matter that would have been dealt with by normal contractual discussion. That was never pursued by the complainant who obviously has some special connection with the police which allowed him to criminalise a civil matter," Mr Alexander said.

It was a commercial dispute between him and a former investor. The former investor was angry about one of his businesses failing.

Nick Alexander

Nick Alexander says his father's Indonesian wife has also been caught up in the drama.

"She seems totally desperate. Last night when they called, she could hardly talk, she was in tears, saying they treated my dad like an animal, a criminal, and he's been charged with nothing," he said.

"She is so disappointed in her own country and the lack of proper justice system there."

A spokesman for Foreign Affairs Minister Bob Carr says the Government has been providing consular assistance to Mr Alexander but cannot intervene in his case directly.

The spokesman says although Mr Alexander won the court hearing over the length of his time in police custody, the allegations of embezzlement are yet to be heard.

The spokesman says no-one knows how long that will take.

Warning over doing business in Indonesia

Mr Alexander says his case provides a message for others about doing business in Indonesia.

"Unless you're big and powerful you better not do business in Indonesia," he said.

"If you're a small and medium sized business or you're an independent businessman then my advice would be don't take the risk. There are better places to be."

Nick Alexander, meanwhile, remains desperately worried about his father and does not know what to do next.

"I think he is really distressed at the moment, doesn't know what to do or who to turn to because it seems it is not within anyone's power to do anything about it," he said.

"I would like to see my dad released on the basis of the court order he won.

"I would like to see the rule of law observed and hopefully I would like to see my dad return to Australia and not have to deal with the Indonesian system after this."